What Is Dividend Reinvestment Plan (DRIP)?
An arrangement where dividends paid by a company are automatically used to purchase additional shares (fractional or whole) rather than being paid out in cash to the shareholder. It is a way to compound returns and reduce transaction costs.
Dividend Reinvestment Plan (DRIP) across 2 exams
Dividend Reinvestment Plan (DRIP) appears on the following exams. Each defines it in the context candidates are tested on:
- Series 7
- An arrangement where dividends paid by a company are automatically used to purchase additional shares (fractional or whole) rather than being paid out in cash to the shareholder. It is a way to compound returns and reduce transaction costs.
- Series 99
- An arrangement in which a customer's dividend payments are automatically used to purchase additional shares of the same security. Operations processes DRIP elections and manages resulting corporate action transactions.